February mortgage lending at eight-year high

The Council of Mortgage Lenders estimates that gross mortgage lending reached £17.6 billion in February - 5% lower than January but 30% higher than February 2015.

Related topics:  Mortgages
Rozi Jones
17th March 2016
CML

This marks the highest lending total for a February since 2008 when gross lending reached £24.1 billion.

CML economist Mohammad Jamei said:

"Lending continues the year on a positive note, with our monthly estimate showing an increase of 30% in February compared to a year ago. This growth rate is in line with what we saw in the closing months of 2015. The recovery is being underpinned by market fundamentals in the UK, as wages grow and unemployment falls, helped by government schemes and competitive mortgage deals.

"But we think it unlikely that there will be any significant acceleration in lending. While there may be a slight current boost to lending as some transactions seek to complete before the 1 April tax changes in the buy-to-let-sector, this is likely to be followed by a slight fall in activity. Affordability pressures continue to weigh on activity, as does the low number of properties coming on the market, though this has been improving very recently."

Jeremy Duncombe, Director, Legal & General Mortgage Club, added:

“Lending continues to experience a year-on-year rise as many homeowners are forced to take out larger loans to cope with increasing house prices. These high prices combined with a lack of affordable housing puts owning a property out of reach for many first time buyers."

Henry Woodcock, principal mortgage consultant at IRESS, commented:

“With February marking the 7th year of record low interest rates, competition among mortgage lenders heated up with 2 year fixed rates below 1.7%. Remortgaging figures have strengthened as borrowers who are hedging their bets on continued low rates, take advantage of low mortgage deals. The rush of buy-to-let landlords and those buying a second home, looking to beat George Osborne’s increases in stamp duty, has led to high levels of gross lending in February.”

“Although gross mortgage lending in February was slightly lower than in January, I think we’ll see an upward trend in March, but lending may dip in the second quarter as effects of stamp duty changes and the introduction of the mortgage credit directive come into play. Market jitters as the EU vote comes into view may also affect lending.”

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